Australia's iron ore miners hang tough as prices fall

PERTH, March 13 If Australian miners are worried
about the dramatic decline in iron ore prices, it doesn't show.

At an annual gathering of many of the world's biggest and
smallest iron ore producers here the mood is upbeat - as if the
heftiest one-day fall in ore prices since the global financial
crisis never happened.

"Iron ore mining isn't tennis, it's a contact sport," said
David Flanagan, chairman of Atlas Iron Ltd. "Sometimes
it hurts a bit, like you copped it in the stomach. We just get
on with it."

Iron ore for immediate delivery to China
slumped 8 percent on Monday after data showed China's trade
balance swung into deficit, amplifying concerns about a slowdown
in the world's No. 2 economy and the biggest importer of the
steel-making ingredient.

Iron ore is down 22 percent so far this year to $104.70 a
tonne, triggering comparisons with a slump in 2012 to below $90
that shuttered many mines and left producers rethinking
expansion plans.

Australia is expected to ship more than half a billion
tonnes of iron ore to China in 2013. Like most Australian
producers, Atlas is still in the black, putting its total costs
of getting iron ore into China at A$70 to A$75 a tonne ($63 to
$68 a tonne).

"I'm just not fussed over what's gone on in the market this
week," said Wayne Richards, executive chairman of Tawana
Resources, which is digging an iron ore mine in
Liberia.

"The way I see it, the price was driven down on sentiment,
not fundamentals, and sentiment will again push the price up,"
he said.

China's biggest listed steel maker, Baoshan Iron & Steel
, complained this week that iron ore prices were
still too high given weak demand and government efforts to close
outdated and polluting mills.

But big miners such as Fortescue Metals Group, Rio
Tinto and BHP Billiton say
Chinese demand won't peak until around 2025 at about a billion
tonnes a year.

The big miners have room for manoeuvre with landed prices to
China at around $50 a tonne, but further falls could put some
higher cost miners in trouble.

Shares in Gindlabie Metals, which has a minority
stake in the Western Australia Karara venture with production
costs of about $70 or more before shipping, fell 18 percent on
Wednesday.

Shares in other small miners have also taken a hit with
Atlas down 16 percent over the past three weeks and BC Iron
down 11 percent.

The majors have not been spared either.

BHP has fallen nearly 8 percent over the last three weeks
and Rio Tinto 13 percent, while Fortescue, which is carrying
debt of more than A$8 billion, has slumped 17 percent.

The impact can also be seen in Perth, a city that is the
headquarters for many miners and well-versed in the boom-bust
cycle of commodities.

In West Perth, a low-rise area of the city favoured for long
lunches and deal making among the mining set, restaurants and
cafes have been ominously quiet lately.

"I just don't go down to West Perth these days, and I'm not
alone," one mining executive said. "With so much uncertainty out
there, it sends the wrong message to shareholders."

Most at the Global Iron Ore and Steel Forecasting Conference
say the price fall was the result of Beijing's efforts last year
to tighten credit, which they believe could threaten 2014
economic growth targets.

"We can't control factors like that," said Morgan Ball,
managing director of BC Iron Ltd, which is operating on
an assumption iron ore will average $110-$130 a tonne in 2014.

"If it comes in within that range, we will have a very
pleasing year," Ball said.

MOSCOW, Dec 9 Carter Page, previously described
as a foreign-policy adviser to U.S. president-elect Donald
Trump, said the purchase of a stake in Rosneft by
Qatar and Glencore made it clear sanctions hurt Western
companies more than the Russian oil major, RIA news agency
reported on Friday.

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